Pakistan Business

Pakistan government plans to waive capacity payments gradually

Measures aim to slash electricity tariffs, prioritize local resources

Pakistan government plans to waive capacity payments gradually
Cooling towers are pictured at a coal-based power station owned by state power utility Eskom in Duhva, South Africa, February 18, 2020. Picture taken February 18, 2020.
Reuters

The federal government has decided to gradually waive capacity payments to power purchase and generation companies, Prime Minister Shehbaz Sharif announced Thursday.

Speaking at a meeting of the Integrated Generation Capacity Expansion Plan (IGCEP) 2024-2034 at the Prime Minister’s House, Sharif said the new strategy could provide up to an additional PKR 2 per unit in relief on electricity tariffs.

The meeting reviewed the electricity generation and transmission system in detail. Sharif highlighted that following the recent reduction in electricity tariffs by about PKR 7.50, the government was implementing a strategy for sustainable reforms in the energy sector.

The new IGCEP 2024-2034 strategy aims to ease the financial burden on citizens further.

Sharif directed the completion of major projects, including the Diamer-Bhasha Dam, on a priority basis to enhance energy production and water storage.

He emphasized that delays in energy projects were unacceptable, adding that a free market for electricity production would soon be established in the country. The market is expected to foster competitive pricing, ensure a sustainable power supply, and reduce tariffs further.

The Prime Minister’s Office reported that competitive bidding for power generation projects and power sales at the lowest prices over the next decade was now possible.

Officials briefed the Prime Minister that 7,967 megawatts of expensive projects were being removed from the IGCEP and that completion dates for certain projects were being revised. These changes could save $17 billion (PKR 4,743 billion).

The briefing highlighted the government’s emphasis on prioritizing local resources and alternative energy sources such as solar, nuclear, and hydroelectric power over imported fuels. This shift is expected to save billions of dollars in foreign exchange reserves.

Shahbaz Sharif commended Federal Minister for Power Sardar Owais Leghari and his team for their efforts, calling the PKR 4,743 billion savings another historic achievement.

The meeting was attended by Energy Minister Sardar Owais Leghari, Economic Affairs Minister Ahad Khan Cheema, Information and Broadcasting Minister Attaullah Tarar, Petroleum Minister Ali Pervez Malik, and senior officials from relevant institutions.

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